Case Note & Summary
The dispute arose from the allotment of residential plots in Sectors 23 and 24 of the Rohini Scheme in Delhi. A draw of plots was held on March 27, 1991 for 5000 plots. Around 3000 allotment letters were issued between April 6, 1991 and March 27, 1991, leaving about 2000 successful applicants awaiting allotment letters. Before the remaining letters could be communicated, landowners whose lands were acquired under a notification issued under Section 4(1) of the Land Acquisition Act, 1894 approached the High Court and obtained a stay on further proceedings, thereby halting the issuance of allotment letters. The stay was vacated on August 4, 1992, and special leave petitions filed by the landowners were dismissed by the Supreme Court in September 1992. Meanwhile, the Government of India re-determined the cost of land for the years 1992-94 at Rs.2675.29 per square yard. The Delhi Development Authority (DDA) evolved a principle of calculating development charges at par with the cost of living index, which worked out to 16.62% per annum. Based on this, DDA recalculated the cost of plots at Rs.1579.17 per square yard and issued allotment letters demanding payment accordingly. The allottees challenged this demand in the High Court in C.W.P. No. 196 of 1994. The High Court, by judgment dated August 11, 1995, declared the demand invalid and directed that while the DDA seeks equity, it must also do equity. Since unsuccessful applicants were refunded their deposits with 7% interest per annum, the High Court directed that escalation charges should also be calculated only at 7% per annum and not 16.62%. The DDA appealed to the Supreme Court. The appellant contended that it had not demanded the current rate of Rs.2675.29 per square yard but had instead worked out a special equity by enhancing cost at 16.62% per annum based on the cost of living index, and the High Court was not justified in reducing it to 7%. The respondents argued that the DDA had not produced material to show that escalation cost would be 16.62% and that no evidence existed that between the date of stay and the date of demand the amount had been expended on developmental charges. The Supreme Court found force in the appellant's contention. It noted that the basis on which all parties proceeded and which the High Court accepted was that escalation charges for improvements had been worked out at 16.62% per annum. The direction to charge only 7% was not based on any rational principle. The Court also rejected the respondents' argument about lack of evidence, noting that the point was not raised before the High Court. The Supreme Court held that the DDA had spent money on development and had made demand at a reduced rate. The appeals were allowed, the High Court order was set aside, and the DDA was directed to charge interest at 7% on the deposits made by the respondents till the date of the letter of allotment. Time for payment of the amount at Rs.1579.17 per square yard was extended for six months, and the appellant was directed to deduct the difference of the rate of interest on the deposit amount at 7% from the date of the original draw till the date of communication of the letters of allotment. No costs were awarded.
Headnote
A) Land Acquisition - Allotment of Plots - Escalation Charges - Land Acquisition Act, 1894, Section 4(1) - High Court directed escalation charges to be calculated at 7% per annum on equity grounds, but the Supreme Court held that this direction was not based on any rational principle because the Delhi Development Authority had spent money on development of plots and used the cost of living index at 16.62% per annum to compute escalation. The High Court's order was set aside and the escalation rate of 16.62% was upheld, subject to interest on deposits at 7% (Paras Not mentioned). B) Equity - Interest on Deposits - Delhi Development Authority directed to pay interest at 7% per annum on deposits made by allottees from the date of original draw till the date of communication of letters of allotment to balance equities (Paras Not mentioned). C) Procedure - New Plea - Respondents' contention that the Delhi Development Authority did not produce material to show escalation cost at 16.62% and no evidence of expenditure on developmental charges was not raised before the High Court; the Supreme Court declined to entertain this new plea (Paras Not mentioned).
Issue of Consideration
Whether the High Court was right in directing calculation of interest at 7% of the escalation charges on the principle of equity, instead of the 16.62% per annum escalation claimed by the Delhi Development Authority based on the cost of living index.
Final Decision
The appeals were allowed. The High Court order was set aside. The Delhi Development Authority was directed to charge interest at 7% on the deposits made by the respondents till the date of the letter of allotment. Time for payment of the amount at the rate of Rs.1579.17 per square yard was extended for six months. The appellant was directed to deduct the difference of the rate of interest on the deposit amount at 7% from the date of the original draw till the date of communication of the letters of allotment. No costs were awarded.
Law Points
- Rate of plot is as prevailing on date of communication of allotment letter
- Escalation charges can be computed based on cost of living index
- High Court's equity direction must be rational
- Allottees entitled to interest on deposits
